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Startup Founder Employment Agreements: Are They Needed?

Startup Founder Employment Agreements

In this interview with Jennifer Rubin, Member, Employment, Labor & Benefits Practice at Mintz Levin, we discuss why its important for startup founder employment agreements.

Jen focuses on C-suite executive compensation practices, and on meeting the increasingly complex employment needs of executives of public and private corporations.  When she isn’t negotiating employment, equity and severance arrangements, Jen leverages her twenty-five years of experience as a trial lawyer to help clients craft business solutions to legal problems.  Jen, who has an AV Preeminent ranking from Martindale-Hubbell, which publishes a highly respected Law Directory, that provides background information on United States lawyers and law firms.

She is also a member of the Board of Directors of Big Brothers Big Sisters of San Diego County and is a faculty member and advisor to The Honor Foundation, a non-profit organization that assists Navy Seals and other armed services special operators transition from military service to the private sector.  Jen is frequently quoted in the Wall Street Journal and other publications.

According to Jen Rubin:

“One of the things that founders in particular need to be concerned about is that you’ve birthed your baby, so to speak, and now you’re fostering it. You’re bringing in outside investment to help bring it along with the hope of an exit. That’s the general business plan. The problem arises when outside investment comes in and, for one reason or another, they may decide that you are no longer the key leadership that they want. From a founder’s perspective, you want to get in writing what’s going to happen if you are asked to leave for some reason. You’re fired, in effect. That’s the importance of employment agreements from a founder’s perspective, or any executive. What are the financial terms upon your departure? Having that in writing is critical. That’s not anything that the law is going to supply to you. That’s something that you need to have in writing, signed by both you and the company. It’s very important for an executive who might be giving up other opportunities to come and work in a certain company or a founder who is trying to get things moved along. You want to make sure that you understand what’s going to happen if you’re terminated. It’s the same thing in terms of what happens to the equity. You may have options that might vest or restricted stock that may have restrictions that would lapse upon certain events. It’s very important to get that in writing.”

This is Patrick Henry, CEO of QuestFusion, with The Real Deal…What Matters.